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SEC charges former corrections officer with crypto fraud

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TL;DR

  • The United States SEC has changed a former corrections officer for carrying out a cryptocurrency scam.
  • Regulatory response to unraveling crypto scams in the industry.

A former lieutenant at the New Jersey Department of Corrections, John A. DeSalvo, is facing charges by the United States Securities and Exchange Commission (SEC) for allegedly orchestrating a cryptocurrency scam with a specific focus on police officers and first responders. The announcement, made on August 23, reveals that DeSalvo is accused of raising $623,388 from 222 investors between November 2021 and May 2022.

SEC charges DeSalvo in the sale of his Blazar token

The alleged scheme involved the sale of his own cryptocurrency token, named Blazar. DeSalvo reportedly claimed that Blazar would revolutionize traditional state pension systems for police officers, firefighters, and paramedics, promising substantial returns to potential investors. DeSalvo is said to have assured potential investors that Blazar Token could be purchased through pretax payroll deductions, much like contributions to retirement savings plans such as pensions, 401(k)s, and IRAs.

This unique selling point was intended to attract police officers and first responders to invest in the cryptocurrency. Despite DeSalvo’s claims, investigations reveal that the token was not registered with the SEC, contradicting his statement that it was a “securitized token.” This misleading information misled investors, who were further deceived when DeSalvo sold a significant number of Blazar tokens worth $51,000 upon its launch on the decentralized exchange PancakeSwap in May 2022.

The deception continued as DeSalvo allegedly violated his own claim of an initial “lock-up” period for insiders by offloading 41 billion Blazar tokens during the PancakeSwap debut. This unexpected sale contradicted his promise to investors that there would be a holding period. Consequently, investors found themselves unable to sell their Blazar tokens as DeSalvo capitalized on his sale. The aftermath was grim, as the Blazar token’s value plummeted by over 99.9% within two weeks of DeSalvo’s PancakeSwap transaction.

Regulatory response to unraveling crypto scams in the industry

The SEC’s statement underlines that DeSalvo’s substantial token sales exerted intense downward pressure on Blazar Token’s trading price, leading to a severe liquidity crisis on PancakeSwap and causing significant financial losses for investors. The SEC’s response to this alleged fraudulent activity is comprehensive. Seeking to protect investors and hold DeSalvo accountable, the commission is pursuing a permanent injunction against him to prevent future involvement in security offerings.

Additionally, civil penalties and disgorgement of profits are being sought to ensure accountability for the losses incurred by innocent investors. The case against DeSalvo highlights the importance of investor diligence in the cryptocurrency space. The promise of impressive returns and innovative investment mechanisms can sometimes cloud the judgment of potential investors, making them susceptible to fraudulent schemes. Regulatory bodies like the SEC play a vital role in safeguarding investors by investigating and prosecuting individuals who exploit the burgeoning cryptocurrency market for personal gain.

This incident serves as a reminder that while the cryptocurrency landscape offers exciting opportunities, it also harbors risks that investors must be aware of. As law enforcement agencies and regulatory bodies continue to crack down on fraudulent activities, individuals intending to invest in cryptocurrencies are encouraged to exercise caution and conduct thorough research before committing their funds. The case against John A. DeSalvo underscores the alleged fraudulent activities within the cryptocurrency market.

Targeting police officers and first responders with promises of revolutionary investment opportunities, DeSalvo’s actions have resulted in significant financial losses for investors. The SEC’s response, seeking injunctions, penalties, and profit disgorgement, illustrates the seriousness with which regulatory bodies approach such cases to protect innocent investors. This incident reinforces the need for due diligence and awareness among potential cryptocurrency investors, as well as the role of regulatory agencies in maintaining market integrity.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Owotunse Adebayo

Adebayo loves to keep tab of exciting projects in the blockchain space. He is a seasoned writer who has written tons of articles about cryptocurrencies and blockchain.

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